AFM Consumer Monitor Mortgage Closers Report – Spring 2021 — AFM — NL

AFM Consumer Monitor
Mortgage Closers
Report for AFM – Spring 2021 © Ipsos 2021. All rights reserved. Contains Ipsos' Confidential and Proprietary information and may not be disclosed or reproduced without the prior written consent of Ipsos.

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Introduction
Background
The AFM advocates for fair and transparent financial markets. As an independent conduct supervisor, the AFM contributes to sustainable financial well-being in the Netherlands. The Consumer Monitor measures developments in consumer behavior over time. The Consumer Monitor was launched in 2004 and has been conducted every six months since then. The primary objectives of the Consumer Monitor can be summarized as follows:

Describing the behavior and attitudes of financial consumers
Describing market and product aspects in the financial market.
Guide
This report covers the Consumer Monitor, conducted in spring 2021 (Q1 2021). Fieldwork ran from March 30 to April 8, 2021. This report focuses on the sub-topic "mortgages". The report focuses on recent mortgage closers: individuals who closed a mortgage between September 2020 and February 2021. It covers, among other things, the closer's profile, the orientation and closing process, advisory fees, and home sustainability improvements. Where possible, results are compared with previous measurements. All described differences between target groups, including type of closer, closing channel, and age groups, are statistically significant.

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Fewer first-time buyers and more renovators are closing mortgages Results – Mortgages Type of mortgage closer Base: All recent mortgage closers: Q1 2012 to Q1 2020: n=323-600; Q1 2021: n = 600 Refinancing due to expiry of fixed-rate period Base: Recent mortgage refinancers (n=1.266). Source: Screening March 2021

Compared to last year, the share of first-time buyers among mortgage closers has decreased to 19%, aligning with the 2019 level. A possible explanation for this decline is the continuously rising house prices, making it harder for first-time buyers to purchase a home.
The upward trend in the share of renovators has continued (16% in 2021). Rising house prices are also a likely explanation here; it is more cost-effective to renovate the current home than to buy a larger one. In the Autumn 2020 Consumer Monitor, one-third (33%) of all mortgage holders stated they had renovation plans.
The percentage refinancing due to the expiry of the fixed-rate period (45%) is comparable to previous years.
For this report, first-time buyers (people buying a home for the first time) and re-enterers (people moving from a rental to a home they previously owned) have been combined. These two groups are referred to as 'first-time buyers' in the conclusions.
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19 19 25 19 23
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First-time buyer Down-mover Refinancer Renovator 52% 55% 56% 45% 53% 55% 48% 45% 44% 55% 47% 45% Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Type of mortgage closer Refinancing due to expiry of fixed-rate period

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Annuity and interest-only mortgages remain most popular Results – Mortgages Which mortgage type did you close? Base: All recent mortgage closers Q1 2012 to Q1 2020: n=323-600; Q1 2021: n = 600. Mortgage type

The annuity mortgage is again the most chosen mortgage type (54%), but the difference with the interest-only mortgage is very small (52%).
The share of the annuity mortgage is highest among first-time buyers (64%) and lowest among refinancers (39%).
Refinancers, on the other hand, more often have an interest-only mortgage (66%), while the share of this mortgage type among first-time buyers is clearly more limited (23%).
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Annuity mortgage Interest-only mortgage Linear mortgage Savings mortgage Bank savings mortgage Investment mortgage

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Seven out of ten use a financing contingency when purchasing a new home Results – Mortgages Did you use a (mortgage) financing contingency when purchasing the new home? Base: Recent mortgage closers who purchased a home: Q1 2018-2020: n =310-351, Q1 2020: n = 320 Used financing contingency?

70% of those who closed a mortgage for the purchase of a new home used a financing contingency. This is comparable to last year.
70%
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Yes No, on own initiative from viewing No, on advice from viewing Don't know

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First-time buyers have a higher LTV than down-movers Results – Mortgages Loan to Value - Loan to Income Base: All first-time buyers and down-movers where Loan to Value/Loan to Income is known LTV First-time buyers: Q1 2021 n = 94 (66%*); Down-movers: Q1 2021: n=206 (84%). LTI First-time buyers: Q1 2020: n = 75 (66%); Down-movers: n=122 (59%)

% of target group for whom both mortgage amount and purchase price are known % of target group for whom both mortgage amount and income are known
Loan to Value – First-time buyers Loan to Income- First-time buyers In 2013, the maximum mortgage could not exceed 105% of the house value. This percentage was reduced by 1 percentage point each year until it reached 100% in 2018. A mortgage must increasingly be in proportion to the house value: Loan to Value. However, through the use of statutory exceptions, an LTV of > 100% remains possible. 65% 55% 67% 60% 44% 46% 35% 22% 29% 20% 19% 30% 29% 28% 13% 16% 14% 22% 26% 24% 37% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 Q1 2016 Q1 2015 Less than 100% 100% to 101% More than 101% Loan to Value (LTV) Mortgage amount / Purchase price * 100 For data validation, a check question was included if LTV > 101: Are you sure the amounts just provided are correct? Loan to Value – Down-movers Loan to Income - Down-movers Loan to Income (LTI) Mortgage amount / Maximum mortgage amount * 100 LTV/LTI can only be calculated if both the mortgage amount, purchase price / max. mortgage amount, and income are known. In Q1 2021, LTV was known for 84% of respondents (n = 267) and LTI for 61% (n = 197). 57% 48% 52% 56% 41% 37% 26% 23% 37% 30% 21% 34% 37% 36% 20% 15% 18% 23% 25% 27% 38% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 Q1 2016 Less than 100% 100 to 101% More than 101% 20% 25% 27% 25% 24% 26% 19% 27% 21% 16% 23% 21% 61% 48% 48% 53% 51% 50% 5% 5% 1% 3% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 Q1 2016 80% or less 81% to 90% 91% to 100% More than 100% 28% 52% 58% 48% 48% 52% 16% 18% 18% 16% 21% 11% 56% 29% 22% 34% 28% 34% 1% 1% 1% 3% 4% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 Q1 2016 80% or less 81% to 90% 91% to 100% More than 100%

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First-time buyers invest an average of €47,000 in savings to reduce their mortgage amount Results – Mortgages Did you contribute savings to achieve a lower mortgage amount? Base: All recent closers: n=600; First-time buyers: n=114, Down-movers: n=206; Refinancers: n=182. How much savings did you contribute? Base: All recent mortgage closers for whom the amount of savings contributed is known, Total: n=253; First-time buyers: n=84; Down-movers: n =92; Refinancers: n=52. Reducing mortgage amount with savings and average amount contributed

One-third (34%) of all mortgage closers contributed their own savings to reduce the mortgage amount. First-time buyers do this in just over half (55%) of cases and contribute an average of €47,000. First-time buyers also more often than average contribute savings from others (26%).
Down-movers who contribute savings to reduce the mortgage amount contribute an average of €56,000. They can often use the equity from their previous home and therefore have more savings available.
Total First-time buyers Down-movers Refinancers Average amount of contributed savings €43k €47k €56k €21k 34% 11% 43% 13% Yes, own savings contributed 55% 26% 17% 6% 39% 8% 44% 11% 23% 7% 51% 17%

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Yes, contributed savings No, but I had own savings No, I had no own savings Don't know / prefer not to say 44% 49% 46% 50% 51% 44% 35% 36% 33% 31% 11% 14% 11% 12% 12% 1% 2% 6% 5% 6% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 73% 69% 71% 76% 49% 17% 24% 17% 22% 36% 6% 5% 8% 1% 12% 3% 2% 4% 4% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 Despite rising house prices, contributed savings remain equal to previous years Results – Mortgages Did you contribute savings to achieve a lower mortgage amount? Base 2021: Total: n=600; First-time buyers: n=114; Down-movers: n=204; Refinancers: n=184. NB2. From 2020, there are multiple answer options for "contributed savings" (own savings or from others). For comparison, these are combined here and the percentage for all unique respondents is shown. Reducing mortgage amount with savings and average amount contributed Total Down-movers Refinancers Avg. First-time buyers Avg. Avg. Avg. €43k €42k €43k €40k €43k 42% 46% 39% 56% 44% 43% 35% 37% 31% 35% 13% 17% 19% 10% 16% 3% 3% 5% 3% 6% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 29% 32% 19% 26% 28% 51% 44% 48% 43% 41% 17% 20% 27% 28% 24% 4% 4% 6% 3% 7% Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017 €56k €51k €58k €54k €54k €47k €47k €44k €36k €39k €21k €19k €23k €24k €23k

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Nearly three-quarters of first-time buyers have reduced the mortgage amount using savings 46% 45% 44% 56% 39% 46% 42% 46% 49% 49% 76% 71% 69% 73% 54% 53% 51% 50% 46% 49% 44% 41% 26% 28% 26% 19% 32% 29% 0% 20% 40% 60% 80% Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Total First-time buyers Down-movers Refinancers Did you contribute savings to achieve a lower mortgage amount? Base 2021: Total: n=600; First-time buyers: n=114; Down-movers: n=204; Refinancers: n=184. NB2. From 2020, there are multiple answer options for "contributed savings" (own savings or from others). For comparison, these are combined here and the percentage for all unique respondents is shown. Mortgage amount reduced with savings Results – Mortgages €47k €56k €43k €21k Avg. amount in 2021

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One in five first-time buyers uses consumer credit to reduce their mortgage amount Results – Mortgages Did you take out consumer credit to arrange the financing? Base: All recent mortgage closers Q1 2015-Q1 2020: n = 401-600; Q1 2021: n = 600). Base: All First-time buyers Q1 2015-Q1 2020: n = 132-170; Q1 2021: n = 114)

Mortgage closers used consumer credit less often to arrange financing than last year (2021: 10%; 2019: 14%). One in five (19%) first-time buyers used consumer credit, which is comparable to 2020 (then 15%).
Younger people (18-34 years) more often need consumer credit than older people (20%; 35-49 years: 12%; 50-54 years: 6%; 50+ years: 2%).
Recent closers who closed their mortgage through an independent advisor use consumer credit less often than average (6%), while mortgage chains use it more often than average (22%).
Reducing mortgage amount with consumer credit 8% 12% 4% 8% 8% 9% 14% 10% 9% 13% 4% 8% 10% 16% 15% 19% 0% 5% 10% 15% 20% Q1 2015 Q3 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Total First-time buyers

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Just over a quarter of first-time buyers reduce the mortgage amount with a gift or guarantee from family members Results – Mortgages 9% 4% 8% 78% 3% 8% 6% 6% 76% 5% 11% 4% 7% 78% 2% 14% 5% 4% 74% 4% Yes, received gift Yes, family guarantee Yes, otherwise No Don't know / prefer not to say Q1 2021 Q1 2017 Q1 2016 Q3 2015 Did you achieve a lower mortgage amount through other means than consumer credit? (Multiple answers possible) Base: All respondents; total: Q3 2015-Q1 2017 n=401-457; Q1 2021: n=600 First-time buyers: Q3 2015-Q1 2017 n=142-170; Q1 2021: n=114.

One-fifth (19%) of mortgage closers achieved a lower mortgage amount through a means other than consumer credit or savings. This is comparable to 2017, when this question was last asked (also 19%).
Among first-time buyers, this percentage is higher in 2021 than among all closers (28%), but also higher than the percentage among closers in 2017 (then 16%). First-time buyers more often receive a gift than average (16%; all closers: 9%).
Total First-time buyers
Reducing mortgage amount by other means than consumer credit (multiple answers possible) 19% 28% 16% 6% 6% 69% 3% 9% 5% 4% 76% 8% 13% 3% 4% 80% 1% 27% 10% 8% 80% 6% Yes, received gift Yes, family guarantee Yes, otherwise No Don't know / prefer not to say Q1 2021 Q1 2017 Q1 2016 Q3 2015

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Three in ten who previously had an interest-only mortgage portion have increased it for the new mortgage Results – Mortgages Is the size of the interest-only portion of your new mortgage smaller